Private equity: an unlikely resource for public companies in slow economies

February 20, 2008
American Enterprise Institute for Public Policy Research

By John Chapman and Omeed Jafari

Orit Gadiesh and Hugh MacArthur, consultants at Bain &
Company, have written authoritatively on what public companies can
learn from private equity in a new book (Lessons from Private
Equity Any Company Can Use, Harvard Business School Press, 2008).
In short, say the authors, the discipline of higher leverage,
specific goals driven by compensation, and effective strategic
planning for change over a 3-5-year horizon all force a corporate
focus on results that drive firm value--which, in the private
equity world, reduces to the paramount metric of free cash
flow.